Crypto Use Cases in 2023

Depending on which side of the investor spectrum you are in, you might be either a strong optimist or a pessimist about the future of crypto, blockchain and web3 in general. While 2022 had been a year of many mishaps in web3 world, there were significant positives. The Merge implemented without any hassles was a huge win than many had a chance to appreciate. There was an increase in Layer -2s and Rollups, along with Proof-of-Reserves for exchanges.

Every bull run brings in enthusiasts and every bear run drives them away.

Irrespective of the market character, it is important to monitor the evolving use cases for crypto and blockchains:

1. As a currency: There are parts of the world and types of transactions that crypto enables as currency. The primary purpose of currency is to enable trade of goods/services. Many countries like El Salvador and Argentina embraced the idea. Others introduced their own stablecoins and digital currencies.Vitalik breaks down stablecoins into three categories:

2. As an investment asset: There is no denying the fact that most investors currently in crypto market are here for returns. Unlike the traditional businesses, where business is backed by a product or services, backed by development, backed by idea, and backed by leaders, crypto inverts the pyramid. Fundamental analysis makes little to no sense here and so, considering Crypto as a pure investment asset is a misguided use case.

3. As a philanthropy device: Call it philanthropy, call it social cause, call it public projects. The rise of crypto as a device for philanthropy cannot be denied. Recent use cases for Ukraine war, open vaccinations etc. which are otherwise difficult to achieve makes this one of the strongest use cases for crypto.

4. As an identity: Deviating from crypto, Blockchains are successful in validating the financial transactions, to the extent, now it is time for ZK-SNARKs. It is time to expand the blockchains beyond financials, say Farcaster for social messages and connectivity, NFTs for arts and even individual identities for voting (non-political).

Building network states , network interoperability, and decentralized finance are still far away. With the number of use cases growing slowly but steadily despite the downfalls, we expect, in Vitalik’s words, the crypto world to be Linux rather than Esperanto.

Photo by Art Rachen on Unsplash